Banking Sector Led Local Bourse To A Five-Star Week, as Market Capitalisation Soar by N340 Billion
Global Stocks Advance on Possible Short-Term U.S Debt Ceiling Increase, Job Data
Last week, positive sentiments dominated eleven (11) out of the fourteen global market indices under our coverage, while the remaining three (3) indices depreciated. This performance was due to a possible short-term increase of the U.S debt ceiling by $480bn to avert national default and economic crisis until a permanent solution is passed, inflation worries caused by supply chain constraints, surging energy prices, and job reports
According to the report from payroll processing firm ADP, private jobs rose by 568,000 in September, faster-than-expected pace and ahead of the downward revised 340,000 reading in August. This data comes amid concern about how fast hiring would grow considering the ongoing fear over the delta spread and signs that the brisk economic growth was beginning to slow down, particularly due to the supply chain bottlenecks that have driven inflation higher.
Also, the number of Americans filing new claims for jobless benefits totaled 326.,000 last week, a drop of 38,000 from the previous week, representing the biggest drop in three months, suggesting the labour market recovery was gaining momentum after a recent slowdown, as the rate of Covid-19 infections begins to subside.
The U.S Labour Department released the Non-farm payroll data which increased by a disappointing 194,000 in September, indicating that the Federal Reserve could delay its plan to begin to slow down the $120bn per-month bond-buying purchases by the year-end. In addition, the U.S Unemployment rate fell to 4.8%, while average hourly earnings jumped.
China’s foreign exchange reserves – the world’s largest – fell almost 1% in September from the previous month to print at $3.201trn, according to the data from the central bank’s State Administration for Foreign Exchange.
Consequently, all the major U.S indices under our coverage, DJIA Index, Nasdaq Composite Index, and S&P 500 Index increased by 1.22%w/w, 0.09%w/w, and 0.79%w/w respectively.
Similarly, all the major indices under our coverage in Europe; the France CAC 40, UK FTSE 100, and the German DAX Index appreciated by 0.65%w/w, 0.97%w/w, and 0.33%w/w respectively.
Also, all the major indices under our coverage in Asia, the Hong kong HANG SENG, India S&P BSE Index, and China Shanghai Composite increased by 1.07%w/w, 2.20%w/w, and 0.67%w/w respectively except Japan Nikkie 225 that declined by 2.51%w/w.
Furthermore, the major indices in the emerging markets under our coverage, South Africa FTSE/JSE, and EGX 30 increased by 2.48%w/w, and 0.18%w/w respectively while Argentina Merval Index and Brazil Bovespa Index depreciated by 0.09%w/w, and 0.06% w/w.
In the coming week, we expect mixed sentiment, as investors to continue to keep themselves abreast of the progress on the short-term increase U.S debt ceiling and react to the recently released positive U.S jobless claim, which would suggest the labour market recovery is gaining momentum after the recent slowdown.
Positive Sentiment Continues, As Market Capitalisation Surges by N340 Billion w/w
Transaction on the Nigerian bourse ended w/w on a bullish note to extend the previous week’s positive sentiment. Bullish market performances were recorded in all of the five trading sessions. This performance was driven by sustained buy-interests in large-capitalized stocks. as a result, the NGX-ASI and Market capitalization appreciated by 1.61% and 1.62% from 40,221.17 points and.N20.96 trillion to close at 40,868.36 points and.N21.30 trillion respectively Consequently, investors gained N340 billion w/w.
At the end of the week, Banking Index emerged as the best performer with (+4.53%), followed by Oil&Gas Index (+0.24%), and Industrial Goods Index (+0.11%) while Insurance Index (-1.51%) and Consumer Goods (-0.51%) recorded negative performances.
UPL emerged as the best performing stock for the week with a w/w gain of +28.46%, while CORNERSTONE emerged as the worst-performing stock with a w/w loss of -12.07%.
A total of 2.18 billion shares worth N21.96 billion in 22,438 deals were traded this week by investors, as against a total of 2.19 billion shares worth N16.18 billion in 14,377 deals
Forty-two (42) equities appreciated in price during the week, higher than Thirty-three (33) equities in the previous week. Twenty-six (26) equities depreciated in price, higher than Twenty-two (22) equities in the previous week, while eighty-seven (87) equities remained unchanged, as against one hundred (100) equities recorded in the previous week.
This week, we expect mixed sentiment, as investors take profit on the appreciated stocks, as well as hunt for lower-priced stocks with good fundamentals. Furthermore, investors will also track yield movement in the fixed income market.
NASD Market Returns Bullish, as NSI Gained 0.19w/w
Transactions on the NASD OTC Security Exchange Market closed on a positive note to reverse the previous week’s bearish sentiment, as the NASD Security Index NSI advanced by 0.19%, representing 1.42 basis points to close at 734.48 points against 733.06 points in the previous week. Investors gained N1.23 billion for the week, as the NASD OTC Market Capitalisation closed at N638.39 billion for the week.
Total trading activity for the week was valued at N10.29 billion in 110 deals, against N12.25 billion in 100 deals recorded in the previous week. The most traded stocks on the exchange for the week are; SDNGXGROUP, SDCSCSPLC, SDFCWAMCO, SDNDEP, SDNASDPLC, and SD11PLC.
SDNGXGROUP emerged top gainer for the week, with a maximum price appreciation of (+22.63% to N16.15), while SDAFRILAND emerged as the top loser for the week with a price depreciation of (-12.50% to N1.05).
This week’s price appreciation resulted from investors’ buy-sentiment in medium and large capitalized stocks among which are; SDNGXGROUP (+22.63% to N16.15), SDNASDPLC(+8.99% to N12), and SDCSCSPLC (+3.03% to N17).
However, the market breadth close negatively, recording 4 losers and 3 gainers.
In the coming week, we expect mixed sentiment in the NASD OTC market, as investors cherry-pick volatile and attractive stocks.
Marginal Bullish Performance on the Secondary TBs Market
Trading activities for the week on the secondary Treasury bills market closed relatively on a quiet note, as no new instruments were issued by the CBN. Activities were seen on the short and long-term tenor of the bills. The short-term bills closed on a bullish sentiment, particularly the 28-Oct-21, and 25-Nov-21 bills, while interest on the long-term bills was observed mostly on the 11-Aug-22, and 25-Aug-22 bills.
Consequently, system liquidity indicators closed lower, as Overnight (O/N) and Open Buy Back (OBB) dropped to 14.50% and 14.00% respectively, from 15.75% and 15.00% in the previous week.
Furthermore, the average yield of the Treasury Bills closed on a bullish sentiment to 5.27%, as against 5.29% recorded last week, representing a 2bps decrease.
The OMO Bills market traded on a calm note as interest was observed on the long term bills, particularly on the 1-Mar-22, 8-Mar-22, 15-Mar-22, and 16-Aug-2022 bills.
Similarly, the average yield on the secondary Open Market Operation (OMO) closed at 6.47% from 6.32%, representing a 15bps decrease.
In the coming week, we expect the apex bank (CBN) to roll over the matured Treasury Bill instruments by offering new bills. Looking at the trend from the previous NTB auctions, we expect the investors’ appetite to be titled towards the longer end of the curve and the spot rate to close higher. We also anticipate large activities and bullish sentiment on the T-Bills secondary market, as a result of spill-over demand from the primary auction.
Secondary Bond Market Closed Nearly Flat
This week’s activities on the Bond market were limited to the secondary market, as no new instrument was issued. Trading activities were relatively active, as interest was observed across all tenors.
Also, the Q4 FGN Issuance Bond calendar was released by the DMO on Tuesday (05-10-2021). The calendar contains the re-opening of the 12.5% FGN JAN-2036, 16.2499% FGN APR-2037, 12.98% MAR-2050 bonds with offer size ranging from N50-N60 billion at a specific date of the remaining months of the year, which is subjected to change by the DMO.
The average yield on the bond traded on the FMDQ market closed nearly flat at 8.13%, as against last week’s position.
In the coming week, we expect the bond market to trade on a quiet due to activities on the Treasury Bills primary market. Also, we anticipate bearish sentiment in the secondary bond market, in reaction to the Q4 FGN Issuance bond calendar.
System liquidity indicators closed lower, as Overnight (O/N) and Open Buy Back (OBB) fell to 14.50% and 14.00% respectively, from 15.75% and 15.00% in the previous week.
Foreign Exchange Market
At the I&E FX window, the Naira depreciated by 0.22%(w/w) to close on Friday (08/10/2021) at ₦414.30/USD against ₦413.38/USD from last Friday’s position.
The Foreign Reserve grew by $1,588.74 million to the level of $38.18 billion (07/10/2021) from $36.60 billion (29/09/2021).
The Brent Crude and WTI Crude appreciated by $3.11/barrel (w/w) and $3.47/barrel (w/w) to $82.39/barrel and $79.35/barrel this Friday(08/10/2021) as against $79.28/barrel and $75.88/barrel last Friday(01/10/2021), representing an increase of 3.92% (w/w) and 4.57% (w/w). Similarly, Nigeria’s Bonny Light also increased by $4.51 to $82.18/barrel on Friday(08/10/2021) from $77.67/barrel (01/10/2021), representing a rise of 5.81% (w/w)
Source: GTI Research